Nuclear Deal Turbulence Grounds Tehran’s Purchase Of Western Aircraft

An Airbus of Iranian Aseman airlines taking off in Tehran's Mehrabad airport, undated.

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Nuclear Deal Turbulence Grounds Tehran’s Purchase Of Western Aircraft

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Though sanctions were lifted in 2015, Iran’s attempts to buy airplanes from Western manufacturers have stalled over fears the nuclear deal may be scrapped.

Nine new Airbuses were ordered after the international ban on selling planes to Iran was lifted in 2015, but so far only two have been delivered. Meanwhile, Boeing is slated to deliver a 777 to Tehran in May, but it looks unlikely that will happen now that the Joint Comprehensive Plan of Action, (JCPOA), Tehran’s nuclear deal with world powers, has been called into question after U.S. President Donald Trump repeatedly threatened to abandon the agreement.

Signed in 2015, in exchange for major concessions from Iran on its nuclear program, the JCPOA put an end to nuclear related sanctions, as well as some older embargoes, including on sales of aircraft and their parts to the Islamic Republic.

In 2016, Minister of Roads and Urban Development Abbas Ahmad Akhoundi announced an additional deal for the lease-purchase of 114 jets from Airbus and another fifty Boeing Max 737. This deal is also now in limbo.

Iranian media recently reported that the man representing Iran in the airplane deals, Asghar Fakhrieh Kashan, has resigned. Kashan had warned January 17 that Tehran’s multi-billion-dollar Airbus deal would be off the table if the U.S. leaves the nuclear deal.

"As long as uncertainties are not resolved, we will not provide down payments,” Fakhrieh Kashan told state-run news agency ILNA, adding, “We will wait to see whether the U.S. remains committed to the JCPOA or not, and then make our final decision.”

For their part, the big Western airplane makers have confirmed reports of a finalized memorandum of understanding for selling their products to the national carrier Iran Air, as well as the smaller Iranian airlines Aseman, Iran Airtour, Zagros, and Qeshm.

Whatever the future may hold for the JCPOA, Tehran faces the additional problem of how to finance its deals with Boeing. The airlines have only two years to come up with the money to pay for the planes because the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC), also wary of the JCPOA’s future, has only temporarily given the go ahead for U.S. companies to sell planes and their parts to Tehran until 2020.

An additional hurdle making banks hesitant to finance the renewal of Iran’s airplane fleet is the fact that Iran is not a signatory to the Cape Town Treaty, an international agreement laying out various legal remedies in the case of default on the purchase of aircraft and other large transportation equipment.